NATIONAL UNIVERSITY PEDRO RUIZ

GALLON
Faculty of Civil Engineering, Systems and Architecture

Theme:
REORDER POINT MODEL
Course:
Operations Research II
Members:
Aaron Bautista Castañeda
Carrero Juárez, Sheyla
Party Llenque, Angela
Alex Gastelo Benavides
Cycle:
2017 - I

May 2017
 REORDER POINT MODELS
The importance of inventory control lies in the primary objective of every company:
obtain profits

The generation of profits obviously lies in sales, as they are the engine of the
company, however, if the inventory function does not operate effectively, there will be no sales
sufficient material to be able to work, the client is dissatisfied and the opportunity to have
utilities dissolve. It is for these reasons that there is a need for a control system.
of the inventory.

The system variables that can be managed by the administration to develop a

control system are: the economic batch size, the replenishment frequency, the
forecast of consumption levels and the information method on which it is based
frequency of reviews.

1. Reorder point (fixed quantity,

variable weather
CONTROL MODEL
OF INVENTORIES
2. Periodic review (fixed time,
variable amount

REORDER POINT:

The reorder point is usually managed in industrial companies that consists of the
existence of a signal to the department responsible for placing orders, indicating that the
The stocks of a certain material or item have reached a certain level and something must be done.
new order.

This method consists of an estimation of demand, which determines a quantity.

of replenishment for the next period, as well as the time when it should be carried out
order based on a fixed quantity

According to this system, every time it is necessary to restock a material or a product,

order the same amount. The frequency of the orders is variable due to fluctuations
from the consumption in the inventory. Replenishment orders are formulated for a quantity
default that does not necessarily have to be that of the calculated economic batch.

The purchase order for a material is issued when the stock has reached the quantity
determined as a minimum. (Reorder point) which typically represents the quantity of
reasonable units enough to last in storage during the restocking period or
delivery, plus a reserve amount (safety stock), which is available in the
average throughout the year.

The replenishment quantities are generally fixed and recalculated only when expected.
significant changes in demand (these changes can be verified through consumption
in the exits noted on the inventory cards and forecasted by means of the techniques
of moving average and exponential approximation) .
It is important to keep inventory records with the data provided by availability.
this consists of the physical existence in the warehouse plus pending purchase orders to be fulfilled,
minus the pending outputs for production programs or delayed requisitions.

The acquisition time or delivery time is considered from the moment production begins.
An order until the ordered items enter the warehouse, this system has the following graphic:

Advantages
Advantages:
- Compared to the other policies, this one requires less safety stock.
since it only depends on the fluctuation of demand during the delivery time for
thus costs are reduced.
- optimize the levels of resources involved
- the level of service is better because it increases the likelihood that the order is
supplied with the existing inventory.

Disadvantages:
- Requires continuous reviews of inventory levels.

CASE RESOLUTION PROCEDURE

1. The level of service (n.s):

Mostly we are provided in the problem.

.
∗ 100%

N = number of annual orders

N = D/Q*
F = annual order shortages
D = annual demand
0optimal quantity to order
2. Safety Inventory (I.S (B))

standard deviation

Z = value of the normal tables with respect to the level of service

L = delivery time, expressed in units

T = time considered for the forecast expressed in units

( )= σ Z √ ⁄
I. SB

∑( ∗̅ 2)
σ= √
n-1

3. Reorder Point (R.P.):

P. R. =D L( +) .

Average inventory (Ip):

Ip = 0⁄
2+ .

5. Maximum inventory (Imax):

Ip = Q0+ .
 CASES:
1) Manríquez, a manufacturer of soccer shoes, wishes to implement a control system.
inventories by reorder point, if you expect to offer a service level that has a
error rate of 5%, the delivery time for the soles is 45 days, one has the
The economic lot is equal to twice the average demand and in
In the last two weeks, the following consumptions have been recorded:

DATA Fortnight CONSUMPTIONS

AVERAGE (D–D)2
F=5% 8 3000 3666666 444.443.555
L=45 days 9 5000 3666666 1,777,779,556
Qo = D 10 2000 3666666 2,777,775,556
11 6000 3666666 5,444,447,556
12 4000 3666666 111.111.555
13 2000 3666666 2,777,775,556
sum 22000 3666666 13,333,333.33

Standard deviation:

√ ⁄ (
1.632.993 )( √3 )1=
1.65 ⁄ 4.666.904 pieces

Service level.
n.s = N - F / N x 100

Annual D = 3,666,666 x 24 = 87,999,3984 pieces/year

Qo = 2D = 2(3,666.666) = 7,333.332 pieces / each time

N = D/Qo87,999.984 / 7,333.332 = 12 annual orders

F = (5%)(12) = 0.60 missing per year

n.s = 12 - 0.60 / 12 x 100 = 95%

2. Safety Inventory

√ ⁄ (
1.632.993 )(
1.65√3 ) ⁄ 4,666.904 pieces
1=
Due to the fact that the historical data is in biweekly periods

If 15 days = 1 unit

45 days = L L=3

3. Reorder Point

P.R = D(L) + βP.R = (3,666.666)(3) + 4,666.904 = 15,666.902 pieces.

4. Average Inventory

Ip = (QO(/2) + β = 7,333.332 / 2 + 4,666.904 = 8,333.570 pieces

Maximum Inventory
Qo+β= 7,333.332 + 4,666.904 = 12,000.236 pieces
A company has a material that is vital for the process, its annual consumption is
1100 units. The supplier of this material takes 3 days to deliver and is required to
2 additional days of safety inventory, as well as the number of days worked in
One year is 250 days. Determine the reorder point.

SOLUTION:

Reordering point.

D: Average demand per day.

safety inventory.

Delivery time averaged in days.

So:

R = D x Te + B

R =?

D = 1100/250

B = 2x (1100/250)

Te= 3

R = (1100 / 250) x 3 + 2 x (1100 / 250)

R = 22

3) Cónica Editions wants to establish a reorder point system to control its

stocks of technical manuals, whose demand continues with a standard deviation or
standard of 20 units/month. The time considered for the forecast is 1,
average demand 1,200 units/month and the manuals are sold in batches of 100 units, the
the delivery time of the batch is 3 weeks, Ediciones Cónica wants to offer a level of
90% service.
Determine:
a) Number of absentees
b) Reserve (security inv.)
c) Average Inventory
d) Inventory level at which a new order should be placed.
D = 1,200 units/month x 12 = 14,400 units. Annually

Q*= 100 pieces each time

90%

S = 20 units/month
14,400
= ∗ = 100
= 144 quadrupeds annually
 −
1) . = = −( ∗ . )
144 - F
0.90= F = 144 -144( *0.90 )
144

( 0.90144
)( =)144 - F F = 14.4 annuals

( )(
F = 144 -90144 )

F = 14.4 annuals

Considering that: 7 days x 3 = 21 weeks (L=3 weeks)

30 days…….. 1 unit

21 days………The unit

L = 0.70

2) I.S= oz√ /
I.S = 20(1.23)0.7/1
√
I.S=20.581 units

3) = ( +)
PR = 1200 (0.70+)20.581
= 860.581 uds
4) = +
2
100
= + 20.581
2
Ip = 70.581 uds
5) = +
100+ 20581
1200.581 uds